Split construction market has characterized the year

Operations in business area Construction are run via some 150 local offices all over the Nordic region, organized in eleven regions in Sweden, three in Norway and two in Finland. There are specialized housing production units in Stockholm, Gothenburg and the Öresund region. Construction maintenance operations are run in a nationwide organization in Sweden. Other regions are responsible for all types of construction projects in their geographic area.

The Business 2024

The year was characterized by a split construction market. The housing market continued to be weak while the market for other building construction, above all for the public sector, was good. Many of the projects we received during the year were partnering projects that were preceded by so-called phase 1 contracts. This means that Peab was contracted at an early stage and participated in planning for the project to map out together with the customer an optimized product with the right quality and level of risk.

Housing projects are a smaller part of operations

There have been fewer ongoing housing projects in construction operations over the past two years. The high level of construction costs and interest rates have smothered demand for new housing production. As interest rates drop construction is expected to accelerate again, even if recovery will take time. The construction contracts signed during the year reflect a high level of sustainable construction and reuse awareness in our customers. For example, Peab is building 191 rental apartments, offices and a garage in two buildings in Jönköping which will be certified according to Miljöbyggnad Silver. Another example of a housing project is the 105 new rental apartments in Visby, three apartment buildings in Espoo and 97 new apartments in Helsinki.

Interest in renovating homes instead of building new ones has also grown. In Ronneby we carried out Sweden’s first renovation project certified according to the Swan ecolabel. The project achieved substantial climate savings by keeping the building’s foundation, frame and facade intact and renovating the existing windows. We started two major renovation projects in Norwegian Tromsø comprising 146 respectively 193 apartments. In the latter project surplus material from other construction projects in Tromsø will be reused. In Finland several renovation projects are underway in Helsinki and in one of them Peab will convert an old office building into 58 apartments and a number of other premises. The building’s structures, facade, roof and its technical systems will be modernized to meet current requirements for sustainable property.

Growing number of projects in public building

The need to rebuild and build new public premises continues to be significant in the Nordic region. There was a high level of production in the countries we operate in during 2024 of different types of public projects such as schools, hospitals, sports centers and swimming pool facilities. We are also building more and more buildings with stringent security and protection requirements.

In Skåne we signed contracts for three new elementary schools during the year, all of which will be certified according to Miljöbyggnad Silver. In addition, we were commissioned to convert a property in Malmö into a school that will gather together three high schools with around 1,100 students. In Jönköping Peab is building middle school Djupadal School and in Bergen we are expanding Langhaugen High School with a new school building.

Many swimming pool facilities in the Nordic area have reached the end of their technical lives and need renovation. Some municipalities are even choosing to build completely new swimming pool facilities to improve service and appeal to residents. In Helsinki Peab is renovating Finland’s oldest swimming pool facility that was originally built in 1928. The renovation includes improving energy efficiency and strengthening fire safety. During the year the Malung-Sälen Swimming Pool was inaugurated as well as the Rimner Swimming Pool Facility in Uddevalla. Peab is building an entire swimming pool block in Partille with a swimming pool, apartments, premises and parking. The swimming pool facility, which will be run on solar energy, will strengthen Partille’s position as one of Sweden’s premiere sports cities.

Peab has been contracted to build Gothenburg’s new station building which will be the biggest of the three halls in the Västlänken station Centralen. The project is clearly focused on sustainability and minimizing climate impact. For example, the frame and joists of the station will be made largely of wood and the facade will be built with reused brick. ECO-Betong (ECO-Concrete), recycled steel and other material with lower climate impact will be used as far as possible. The upper level of the station will contain offices certified according to Breeam Outstanding, a certification level with very stringent environmental demands.

Northern Sweden is leading the transition

There are a number of major industrial investments underway in northern Sweden and Peab has long been a strong local presence in the area. During the year Peab and LKAB strengthened their strategic partnership around several planned industrial projects linked to the green transition. For example, the partners signed a letter of intent concerning construction of a hydrogen plant in Gällivare and a construction contract regarding building a demonstration plant for critical minerals in Luleå.

Construction of the Artic Center of Energy in Skellefteå has commenced, commissioned by Skellefteå Municipality. This competence center will work to accelerate electrification of society.

Net sales

Net sales for 2024 decreased by 14 percent and amounted to SEK 23,817 million (27,780). The decrease is due to less activity in new housing production that has not been fully compensated by other types of projects and has been experienced in all the countries we operate in. The portion of other building construction, primarily for the public sector, has increased in net sales. Housing accounted for 27 percent (39) of net sales for the full year 2024.

Profit

Operating profit amounted to SEK 416 million (41 excl. MoS) and the operating margin was 1.7 percent (0.1 excl. MoS). Last year the operating profit was charged with provisions and write-​downs of a total of SEK -465 million, of which goodwill write-​downs were SEK -125 million. Last year included a positive effect of SEK 400 million from the outcome of the arbitration in the case between Peab and Unibail-​Rodamco-Westfield regarding the construction contract Mall of Scandinavia (MoS) in Solna. Operating profit for 2023 amounted to SEK 441 million and the operating margin was 1.6 percent.

Orders received and order backlog

The level of orders received during 2024 amounted to SEK 22,224 million (22,779), among them a new swimming pool block with a swimming pool facility, homes, commercial premises and parking space in Partille worth of around SEK 1.3 billion and construction of Gothenburg’s new station building for SEK 870 million. In addition, orders received from the public sector for other building construction continued to be good.

Order backlog on December 31, 2024 amounted to SEK 23,188 million (24,469). There is a large portion of other building construction for the public sector in order backlog. The proportion of housing projects at the end of the year was 29 percent (32).